Service Sector and Indian Ecomnomy

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Growth of service sector in India

by santosh R.N.S.I.T coll


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DEFINITION

The segment of the economy that providesservices to its consumers. This includes awide range of businesses including financial

institutions, schools, transports andrestaurants.



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THE VARIOUS SECTORS THAT COMBINE

TOGETHER TO CONSTITUTE SERVICE INDUSTRY

ARE:

Trade Hotels and Restaurants Railways Other Transport & Storage

Communication (Post, Telecom) Banking Insurance Dwellings, Real Estate

Business Services Public Administration; Defense Personal Services Community Services

Other Services



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OVER VIEW OF SERVICE SECTOR

Service Sector in India today accounts formore than half of India's GDP.

According to data for the financial year 2006-2007, the share of services, industry, andagriculture in India's GDP is 55.1 per cent,26.4 per cent, and 18.5 per cent

respectively



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GROWTH OF SERVICE SECTOR UNDER FIVE-YEAR

PLAN

First-five year plan(1951-56)

The total plan of budget was 206.8 billion

Among the total plan transportation andcommunication had got allocated to 24%i.e., 49.7 billion and social services

accounted for 16.64% 33 billion



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At the end of the plan period in 1956, fiveIndian Institutes of Technology (IITs) werestarted as major technical institutions.



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SECOND-FIVE YEAR PLAN(1956-61)

The second five-year plan focused onindustry, especially heavy industry. Domestic

production of industrial products wasencouraged, particularly in the developmentof the public sector.

Transport and communication was given23.6% of total budget(430 billion)

http://en.wikipedia.org/wiki/Heavy_industryhttp://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Public_sectorhttp://en.wikipedia.org/wiki/Heavy_industry


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OBJECTIVES OF SECOND YEAR PLAN

a sizeable increase in national income so asto raise the level of living in the country;

rapid industrialization with particular emphasis

on the development of basic and heavyindustries;

a large expansion of employment

opportunities; and reduction of inequalities in income and

wealth and a more even distribution of

economic power.



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THIRD-FIVE YEAR PLAN(1961-1966)

The third plan stressed on agriculture

Again there was more emphasize was givenonly on transportation in service sector whichaccounted to 21%.



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FOURTH-FIVE YEAR PLAN(1969-74)

A total outlay of Rs. 24,882 crores isenvisaged for the Fourth Plan. of theaggregate outlay, Rs. 15,902 crores is in

respect of the public sector Plan and Rs,8,980 crores for the private sector.

In service sector 14 major banks were

nationalized



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FIFTH-FIVE YEAR PLAN(1974-79)

Stress was laid on employment, povertyalleviation, andjustice. The plan also focusedon self-reliance in agricultural production and

defense

http://en.wikipedia.org/wiki/Employmenthttp://en.wikipedia.org/wiki/Povertyhttp://en.wikipedia.org/wiki/Justicehttp://en.wikipedia.org/wiki/Self-reliancehttp://en.wikipedia.org/wiki/Self-reliancehttp://en.wikipedia.org/wiki/Self-reliancehttp://en.wikipedia.org/wiki/Self-reliancehttp://en.wikipedia.org/wiki/Justicehttp://en.wikipedia.org/wiki/Povertyhttp://en.wikipedia.org/wiki/Employment


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SIXTH-FIVE YEAR PLAN(1980-85)

Called the Janata government plan, the sixthplan marked a reversal of the Nehruvianmodel.

When Rajiv Gandhi was elected as the primeminister, the young prime minister aimed forrapid industrial development, especially in

the area of information technology.Progress was slow, however, partly becauseof caution on the part of labor and communist

leaders.

http://en.wikipedia.org/wiki/Janata_Partyhttp://en.wikipedia.org/wiki/Janata_Party


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SIXTH-FIVE YEAR PLAN(1980-85)

Tourism also expanded.

The sixth plan also marked the beginning ofeconomic liberalization

Transport 12411.97 crores

Communications and information andbroadcasting 3124.67

Social services 14035.26



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OUTCOMES OF SIXTH-YEAR PLAN

The production of Computer NumericallyControlled (CNC) machine tools.

The commissioning of the first electronictelecom exchange and the running of trainswith trailing loads of 3000 tonnes.



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SEVENTH-FIVE YEAR PLAN(1985-89)

The plan lay stress on improving the productivitylevel of industries by up gradation of technology.

Communication, Information and

broadcasting 647.2 billion Posts 29.5 billion

Telecommunications 453.8 billion

Education, culture and sports 638.3 billion

Health including medical 339.3 billion



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PERIOD BETWEEN 1989-91 1989-91 was a period of political instability in

India and hence no five year plan wasimplemented. Between 1990 and 1992, there

were only Annual Plans



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In 1991, India faced a crisis in Foreign Exchange(Forex) reserves, thus the country took the risk ofreforming the socialist economy.

P.V. Narasimha Rao also called Father of Indian

Economic Reforms was the twelfth Prime Minister ofthe Republic of India had led one of the mostimportant administrations in India's modern historyoverseeing a major economic transformation.

At that time Dr. Manmohan Singh launched India's

free market reforms that brought the nearly bankruptnation back from the edge. It was the beginning ofprivatization and liberalization in India.

http://en.wikipedia.org/wiki/Foreign_Exchangehttp://en.wikipedia.org/wiki/Foreign_Exchange


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EIGHTH-FIVE YEAR PLAN(1992-97)

This plan can be termed as Rao andManmohan model of Economic development

Transport 879.10 billion

Communication 2600 billion



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Financial services 10.21%

Trade 9.06%

Communication 14.31% Other services 6.22%



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NINTH-FIVE YEAR PLAN(1997-2002)

Total outlay was 85920 billion

Transport 12132 billion 14.1 %

Communication 4761 billion 5.5 %


S


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Financial services 8.93%

Trade 5.86%

Communication 17.14% Other services 8.19%


b h R N S I T ll


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CONTRIBUTION OF TRAVEL AND TOURISM TOGDP AND EMPLOYMENT

WorldAverage(%)

Indian(%)

Worldrank

Contribution of Tourism and TravelEconomy to GDP

10.7 5.3 140

Contribution of Tourism and TravelIndustry to GDP

4.2 2.5 124

Contribution of Travel and Tourism

Economy Employment

8 5.6 140

Contribution of Travel and TourismIndustry Employment

3.1 2.9 111



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b t h R N S I T ll


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ELEVENTH-FIVE YEAR PLAN(2007-2012)

Transportation allocated 202045

Information Technology 11048

Post 3536 Tlcommunications 80753

Tourism 4558


by santosh R N S I T coll


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MILE STONE IN THE GROWTH OF SERVICE

SECTOR

The emergence of India as one of the fastestgrowing economies in the world during the1990s is attributable to the rapid growth of itsservices sector to a great extent.

The sector has been experiencing double-digitsince 2004-05 importantly, a strong growth of 10% in 2005-06 has been instrumental in providing

an impetus to overall real sector activity in theeconomy and propelling it to record a sturdygrowth of 8.4 per cent.




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Subsequent to this, the sector has continuedto exhibit vibrant growth (10.6 per cent)during the first quarter of 2006-07 over the

corresponding period of the previous year,mainly propelled by growth in trade, hotels,transport and communication (13.2 per

cent) followed by finance, insurance, realestate and business services (8.9 per

cent)




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Due to the structural transformation of theIndian economy in the new millennium in favorof a service-dominated economy, the share ofthe services sector in the total GDP hasincreased notably from 49.8% in 2000-01 to54% in 2005-06.

During the first quarter (April-June) 2006-07, the

services sector has accounted for a share of54.2% as compared to 53.3% in the comparableperiod during last year




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QUARTERLY ESTIMATES OF PRODUCTION FOR MAJORCOMPONENTS OF SERVICES SECTOR (RS CRORE)Sub-sectors 2006-07 2005-06 2004-05 2006-07 2005-

06% change over

1. Trade, hotels, 175025 154642 138390 13.2 11.7Transport

and communication (26.7) (25.7) (24.9)2. Financing, insurance,real estateand business services 91527 84021 77245 8.9 8.8

(14.0) (13.9) (13.9)3. Community, social

and personal services 88,771 82637 77009 7.4 7.3(13.5) (13.7) (13.9)

All Services (1+2+3) 355323 321300 292644 10.6 9.8(54.2) (53.3) (52.7)

GDP at factor cost 656,064 602476 555,075 8.98.5




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INDIA'S NET RECEIPTS FROM TRAVELON BALANCE OF PAYMENTSYear Receipts Payments Net Receipts Foreign

TouristArrivals

(in million US$)(million no)

2000-01 3497 2804 693 2.72001-02 3137 3014 123 2.42002-03 3312 3341 -29 2.52003-04 5037 3602 1435 2.92004-05 6495 5510 985 3.5

2005-06 7789 6421 1368 4.1


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Service Sector and Indian Ecomnomy

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